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What I noted from the article is they said "officials" not "official". They mention Kwame Kilpatrick, who is already in jail, but that is just one guy. Sounds like they're going to try and pin this on at least one other person.
What happens if Detroit wins and the Wall Street firms made an illegal 1.4 billion loan? Is that fines or jail time or what?
This is the same as the Deadbeats who blame credit card companies for giving them all that credit they can't repay.
Or the Home Mortgage they now want to walk.
Location: Georgia, on the Florida line, right above Tallahassee
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Detroit Sues Over Debt Deals is the article title.
Detroit leaders are suing to invalidate several Wall Street deals that allowed the city to borrow more than $1.4 billion in 2005 for its underfunded pension plans, arguing that the agreements were illegal and shouldn't be repaid.
Or like the folks that took out mortgages they couldn't afford.
Pay that low interest only payment until it reset and then walk away claiming they got scammed.
Sounds like Detroit made some bad deals in getting loans and now they are trying to welch out of paying. So that leads me to believe that all the city councilors are guilty of the thing they say is illegal.
Either way, loaning money to a dying city is a bad deal.
quote:
Two weeks ago, Judge Steven Rhodes of U.S. Bankruptcy Court denied a mediated settlement that the city had worked out with UBS AG and Bank of America Corp. to pay about $165 million to settle the contracts.
That was the second time the city and creditors had proposed such a plan to Rhodes, but he still said the deal was too sweet for the banks. They had agreed to accept $165 million to end the deal, down from the original $230 million settlement.
.....
"Our position is that in lieu of reaching a settlement, these are illegal transactions to begin with, said Bill Nowling, Orr's spokesman. "So we are asking a judge to invalidate them because the city did not have the authority to create these straw organizations to offer these notes."
.....
The city is suing the Detroit Police and Fire Retirement System Service Corp., the Detroit General Retirement System Service Corp., the Detroit Retirement System Funding Trust 2005 and the Detroit Retirement System Funding Trust 2006.
These corporations have no connection to the pension systems. These were corporations created by the city and the underwriters just to issue the original pension obligation certificates (COPs).
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